Lub-rref (Bangladesh) is waiting for its debut on the bourses on Tuesday, following its Tk150 crore initial public offering (IPO) under the book building method.
After obtaining the regulatory approval, the company got Tk30 as the reference price for its each primary share following bids by the institutional investors.
Later, at the end of January, mass investors subscribed for their shares in the IPO and due to 12 times oversubscription, the company held the draw of IPO lottery on 23 February.
According to the book building method of IPO, half of the company's primary shares were issued to the eligible institutional investors and the remaining half to the public at a 10% discount.
The lubricant manufacturer said in its IPO filing that it would invest Tk98 crore to expand its existing manufacturing plant which would enable the company to capture 20% of the market share – a significant jump from its existing 8% market share in terms of volume.
BNO Lubricants – a brand of the company – sells around 10,000 tonnes of lubricant annually for Tk175 crore.
Bangladesh's lubricant market – with an average 5% annual growth – has now risen to have an annual demand of 1.2 lakh tonnes, and the annual turnover is around Tk6,000 crore, the IPO prospectus added.
Incorporated in 2001, Lub-rref commercially launched its manufacturing plant in 2006.
Currently, 60% of its lubricants are made of responsibly-recycled lubricants, while the remaining 40% are made from imported base oil, the key raw material for lubricants.
The repayment of bank loans of Tk46 crore from the IPO fund will help the company reduce its financing costs. It is spending Tk6 crore on the public offering process.
As of the fiscal year that ended on 30 June, 2019, Lub-rref earned Tk2.08 against each of its shares, while the company's five-year average earnings per share was Tk2.23.
The net asset value per share of the company with Tk100 crore paid-up capital (pre-IPO) was Tk31.92 a year ago. It would be Tk25.96 without adding the revaluation surplus of assets.
NRB Equity Management is working as the issue manager to facilitate the stock market listing of the company.